Feb Nymex natural gas (NGG23) on Friday closed down -0.084 (-1.84%).
Feb nat-gas Friday extended this week's sharp losses and fell to a 10-month nearest-futures low. Â Forecaster Maxar Technologies said well above-normal temperatures are expected across the eastern half of the U.S. through Jan 7, undercutting heating demand for nat-gas. Â Nat-gas prices were also weighed down by weakness in European nat-gas prices, which tumbled to a 10-1/4 month low Friday.
Lower-48 state dry gas production on Friday was 100.6 bcf (+3% y/y), modestly below the record high of 103.6 bcf posted on Oct 3, according to BNEF. Â Lower-48 state gas demand Friday was 80.4 bcf/day, down -4.4% y/y, according to BNEF. Â On Friday, LNG net flow to U.S. LNG export terminals was 11.9 bcf/day, up +61% w/w.
An increase in U.S. electricity output is bullish for nat-gas demand from utility providers. Â The Edison Electric Institute reported Thursday that total U.S. electricity output in the week ended Dec 24 rose +16.5% y/y to 89,032 GWh (gigawatt hours). Â Also, cumulative U.S. electricity output in the 52-week period ending Dec 24 rose +2.6% y/y to 4,135,818 GWh.
In a bearish factor, the Freeport LNG export terminal said on Dec 2 that it expects to restart its facility around year-end, a further delay from its previous indication of a mid-December restart. Â The closure of the facility has been bearish for nat-gas prices since the reduction in LNG exports has boosted U.S. nat-gas inventories. Â The facility has been closed since an explosion on Jun 8. Â The Freeport terminal normally accounts for about 20% of all U.S. nat-gas exports and receives about 2 bcf, or 2.5%, of the output from the lower 48 U.S. states.
Nat-gas prices have support as EU countries agreed to cut nat-gas demand from Russia by 15% by early 2023. Â Also, Russia recently slashed nat-gas exports to Europe to 20% of capacity, putting upward pressure on European nat-gas prices.
Thursday's weekly EIA report was bullish for nat-gas prices since it showed U.S. nat gas inventories fell -213 bcf in the week ended Dec 23, a bigger decline than expectations of -198 bcf. Â Nat-gas inventories are -2.7% below their 5-year seasonal average.
Baker Hughes reported Friday that the number of active U.S. nat-gas drilling rigs in the week ended Dec 30 rose by +1 to 156 rigs, moderately below the 3-1/4 year high of 166 rigs posted in the week ended Sep 9. Â Active rigs have more than doubled from the record low of 68 rigs posted in July 2020 (data since 1987).
More Natural Gas News from Barchart
- Crude Gains on Dollar Weakness and Chinese Energy Demand Optimism
- Nat-Gas Prices Under Pressure on Above-Normal U.S. Temps
- Crude Falls on Covid Concerns and an Unexpected Build in EIA Crude Inventories
- Nat-Gas Prices Plunge as U.S. Production Recovers and Temps Warm
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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